Fair Isaac Corporation · NYSE:FICO
Fair Isaac — Investor Presentation (June 2020)
28 slides from Fair Isaac's investor presentation, June 2020
Slide 1: Demystifying FICO Scores
Demystifying FICO® Scores © 2018 Fair Isaac Corporation. Confidential. . 1
Slide 2: Agenda
Agenda • Credit System Overview • FICO® Score Overview • FICO® Score Dynamics • Protecting your Credit during Coronavirus
Slide 3: How It All Connects
How It All Connects CREDIT YOU LENDERS BUREAUS Apply to lenders for new credit Grant new credit and loans to Create and update your credit Creates FICO® Score and loans you report with public record and algorithms — used to generate lender-provided information FICO® Scores — and provides them to the
Slide 4: Don't be Mistaken
Don’t be Mistaken … • Many credit educational sites provide educational credit scores or credit score versions that are 1. not commonly used by lenders Payment • These non-FICO Scores will likely History 35% be a different value as compared to your FICO Scores • This can lead to confusion and drive
Slide 5: Where Can You Get Your FICO Scores?
Where Can You Get Your FICO® Scores? FU۳ژ°ƩȏȵƷ ¨Ʒǒɓǹƌɋȏȵɲ %ǠȽƩǹȏȽɓȵƷ FU۳ژ°ƩȏȵƷ FU۳ژ°ƩȏȵƷ ȲƷȄژƩƩƷȽȽ ȲƷȄژƩƩƷȽȽ ȵƷưǠɋژȏɓȄȽƷǹǠȄǒ ¥ƌȵɋȄƷȵȽ ¥ƌȵɋȄƷȵȽ 5
Slide 6: Agenda
Agenda • Credit System Overview • FICO® Score Overview • FICO® Score Dynamics • Protecting your Credit during Coronavirus
Slide 7: The Five Information Zones
“The Five Information Zones” Sample Credit Report 1 PERSONAL IDENTIFYING INFORMATION John Smith Date of birth: 1-25-85 ACME, Service Technician 123 Main St. SSN: 888 88 8888 $52,000 Anytown, GA 12345 2 PUBLIC RECORD (LEGAL ITEMS) None 3 COLLECTION ITEMS 7-2018 Collection $500 4 TRADE LINE (ACCOUNT)
Slide 8: FICO Score Defined
FICO® Score Defined A FICO® Score is a three digit 1. number ranging from Payment 300-850*, where higher History equates to lower risk, that 35% lenders use to help them make more informed credit granting decisions. *Industry FICO® Score versions range from 250-900. 8
Slide 9: How do you get a FICO Score?
How do you get a FICO® Score? • Not deceased • One reported credit account open at least 6 months • One reported undisputed credit account updated in last 6 months 9
Slide 10: Predictive Credit Bureau Data Used in a FICO Score
Predictive Credit Bureau Data Used in a FICO® Score Data elements used must be permissible and predictive Considered Not Considered Trade lines (accounts) Age Credit inquiries Address Employment Collections Income Public Records Race Gender 10
Slide 11: Five Categories of FICO Score Predictive Characteristics
Five Categories of FICO® Score Predictive Characteristics 5. Credit Mix 5. 4. 10% 4. of Pursuit Credit New Credit Pursuit of Mix 1. 10% New Credit 10% 1. Payment 10% Payment History 3. 3. History 35% Credit History Credit History 35% Length Length 15% 15% 2. Outstanding Debt 30% 11
Slide 12: 1. Payment History
1. Payment History Key Factors • How recent is the most recent delinquency, collection or public record 1. item? Payment History • How severe was the worst delinquency— 35% 30 days, 90 days? • How many credit obligations have been delinquent? 12
Slide 13: 2. Outstanding Debt
2. Outstanding Debt Key Factors • How much does the consumer owe creditors? • What percentage of available credit card limits is the consumer using? • What percentage is outstanding on open installment loans? 2. Outstanding Debt 30% 13
Slide 14: 3. Credit History Length
3. Credit History Length Key Factors • How long have accounts been established—average number of months accounts have been open 3. • New accounts—number of months Credit History since most recent account opening Length 15% 14
Slide 15: 4. Pursuit of New Credit
4. Pursuit of New Credit 4. Key Factors Pursuit of New Credit • Inquiries: Number of recent credit 10% inquiries (12 months) • New accounts—number of trade lines opened in last year 15
Slide 16: 5. Credit Mix
5. Credit Mix 5. Key Factors Credit Mix 10% • What is the mix of credit product types? • Revolving credit—number of bankcard trade lines • Installment credit—percent of trade lines that are installment loans 16
Slide 17: Agenda
Agenda • Credit System Overview • FICO® Score Overview • FICO® Score Dynamics • Protecting your Credit during Coronavirus
Slide 18: Bottom Line Impact -- Mortgage Loan Example
Bottom Line Impact -- Mortgage Loan Example Substantial savings with higher FICO® Scores! https://www.myfico.com/credit- education/calculators/loan- savings-calculator/ 18
Slide 19: Agenda
Agenda • Credit System Overview • FICO® Score Overview • FICO® Score Dynamics • Protecting your Credit during Coronavirus
Slide 20: Protecting Your Credit During the Coronavirus Outbreak
Protecting Your Credit During the Coronavirus Outbreak • If you are one of the many individuals financially impacted by the coronavirus, help may be available • But you have to take action and proactively reach out to your lenders (preferably before you miss a payment) to discuss your situation • Le
Slide 21: Forbearance and Deferred Payment Plan
Protecting Your Credit During the Coronavirus Outbreak Forbearance With loan forbearance, the lender permits the Neither of borrower to pay either a reduced payment or no these are payment for a temporary short-term period. intended to be Interest continues to accrue. “freebies” – you’ll likely be D
Slide 22: Reporting Rules and Impacts on a FICO Score
Reporting Rules and Impacts on a FICO® Score • The reporting on an account with the following special comments to the credit bureaus are not considered negative by the FICO® Scores ─ Loan in forbearance ─ Loan in deferred payment plan ─ Loan affected by a natural disaster ─ Loan modification • The a
Slide 23: Credit Education = Credit Empowerment
Credit Education = Credit Empowerment • www.MyFICO.com ─ Credit Education Content -- https://www.myfico.com/credit-education ─ Credit Education Pamphlets -- https://www.myfico.com/credit-education/credit- scores/brochures ─ Changing the Score Infographic -- https://blog.myfico.com/wp- content/upload
Slide 24: Operation HOPE
Operation HOPE is a for-purpose nonprofit organization working to disrupt poverty for millions of low and moderate-income youth and adults across the nation. Our focus is financial dignity and inclusion. We equip young people and adults with the financial tools and education to secure a better futur
Slide 25: The Credit and Money Management Program
The Credit and Money Management Program, a core focus of HOPE Inside Adult Empowerment programming, is designed to transform disabling financial mindsets—teaching people the language of money, how to navigate credit, and make better decisions with the money they have. Through workshops and one-on-on
Slide 26: Operation HOPE Impact Over 28 Years
28 YEARS Over the past 28 years, Operation HOPE has served more than 4 million individuals and directed more than $3.2 billion in economic activity into disenfranchised communities over the past 28 years—turning check cashing customers into banking customers, renters into homeowners, small business
Slide 27: Thanks to our partners
Thanks to our partners © 2020 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 27 27
Slide 28: Thank You
en SCORE A BETTER FUTURE Thank You